The Energy Prices Bill has been introduced to Parliament to provide support for consumers in response to the cost-of-living crisis
In the face of rapidly rising bills and a cost-of-living crisis, the Government has created a package of emergency legislation known as the Energy Prices Bill to provide support for consumers, households and businesses with energy costs this winter.
The proposed legislation aims to reduce inflation and support fiscal growth after weeks of economic turbulence. The Bill will be subject to the standard parliamentary process for emergency legislation.
There are a variety of schemes offering financial assistance for domestic and non-domestic customers
The Energy Price Guarantee will ensure that for the next two years, typical households in the UK only pay around £2,500 a year on their energy bill. This will depend on the household’s energy use.
UK households who are not on the mains gas grid and therefore use alternative fuels, such as heating oil, to heat their homes will receive a one-off payment of £400, with more detail on non-domestic consumers to follow.
The Energy Bill Relief Scheme, which took effect on 1 October 2022, provides a discount on wholesale gas and electricity prices for all non-domestic customers (including the voluntary sector and the public sector-such as schools, hospitals and charities) whose current gas and electricity prices have been significantly inflated in light of global energy prices.
Legislation introduced includes enabling comparable schemes in Northern Ireland
Powers in the introduced bill will provide a basis to allow the government to make payments and deliver NI EBSS, which will provide £400 of support to households in Northern Ireland this winter.
Powers will enable a similar delivery model to the Energy Bills Support Scheme in Great Britain, in respect of using the existing regulatory regime to enforce and provide assurance to the government on delivery.
A Cost-Plus Revenue Limit should ensure fairer energy prices in England and Wales
Wholes sale electricity prices in the UK market are currently set by the most expensive form of generation- in this case, gas-fired generation, which has risen significantly in price following tensions with Russia.
Consumers are therefore having to pay more for energy generated from renewables and nuclear, despite the fact that these often cost much less to produce.
Subject to consultation, the Cost-Plus Revenue Limit hopes to curb the amount of revenue generators can make and consequently bring down unprecedented wholesale prices.
The government has been working with the industry on the detail of the proposal, ahead of it coming into force from the start of 2023.
It aims to ensure consumers pay a fair price for low carbon energy and has the potential to save billions for British billpayers, while allowing generators to cover their costs, plus receive an appropriate revenue without unduly profiting from the energy crisis.
Increased investment in the renewable energy sector will help mitigate the impact of the energy crisis
The government has acknowledged the importance of dispatchable and baseload generation for security of supply- and that the low-carbon technologies (such as biomass and nuclear) that can deliver these types of power do tend to have higher input costs. This is being considered as the Cost-Plus Revenue limit policy is being refined.
Business and energy secretary, Jacob Rees-Mogg, said: “We have been working with low-carbon generators to find a solution that will ensure consumers are not paying significantly more for electricity generated from renewables and nuclear.
“That is why we have stepped in today with exceptional powers that will not only ensure vital support reaches households and businesses this winter but will transform the United Kingdom into a nation that offers secure, affordable and fairly-priced home-grown energy for all.”
Chancellor of the exchequer (at the time of writing), Kwasi Kwarteng, said on the Energy Prices Bill:
“Our actions will mean that energy bills for the typical household will be half what they would have been this winter.
“We are protecting people, holding down inflation and preventing Putin’s energy price hike from causing long term harm to our economy by supporting businesses.
“The Energy Prices Bill forms yet another decisive step taken by the UK government to reform the energy market, giving Britain back control of its own home-grown energy and breaking ties to the ever-increasing volatility and uncertainty of the global gas market.”
